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«The Capacity Challenges of Nonprofit & Voluntary Organizations in Rural Ontario Susan Stowe Cathy Barr Working in Partnership © 2005, Imagine Canada ...»

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The Rural Charitable Sector

Research Initiative

Phase II

The Capacity Challenges of Nonprofit &

Voluntary Organizations in Rural Ontario

Susan Stowe

Cathy Barr

Working in Partnership

© 2005, Imagine Canada

Copyright of The Rural Charitable Sector Research Initiative Phase II: The Capacity Challenges

of Nonprofit and Voluntary Organizations in Rural Ontario is waived for nonprofit and

voluntary organizations for non-commercial use.

Imagine Canada

425 University Avenue, Suite 900 Toronto, Ontario M5G 1T6 Tel.: (416) 597-2293 Fax: (416) 597-2294 www.imaginecanada.ca Foundation for Rural Living 1 Stone Road West, 4th Floor Guelph, Ontario N1G 2Y4 Tel: (519) 826-4126 Fax: (519) 826-3408 www.frl.on.ca ISBN 1-55401-117-5 Acknowledgements The authors would like to thank everyone who participated in and advised us on this project for their thoughtful deliberations and their contributions of knowledge and time. In particular, we would like to thank Michelle Quintyn, the Executive Director of the Foundation for Rural Living, and Michael Hall, the Vice President of Research at Imagine Canada for their guidance and comments on earlier drafts of this report.

The Foundation for Rural Living and Imagine Canada wish to acknowledge the support for this

project from:

www.trilliumfoundation.org The Ontario Trillium Foundation, an agency of the Ministry of Culture, receives annually $100 million of government funding generated through Ontario’s charity casino initiative.

The Capacity Challenges of Nonprofit & Voluntary Organizations in Rural Ontario i Table of Contents ACKNOWLEDGEMENTS

EXECUTIVE SUMMARY

INTRODUCTION

RURAL ONTARIO AND ITS NONPROFIT AND VOLUNTARY SECTOR

CAPACITY CHALLENGES OF NONPROFIT AND VOLUNTARY ORGANIZATIONS

THE RESEARCH STRATEGY

FINDINGS

FINANCIAL CAPACITY

Grants

Fundraising

Funders’ understanding of rural nonprofit organizations

Strategies for dealing with financial challenges

HUMAN RESOURCES CAPACITY

Paid staff

Volunteers

STRUCTURAL CAPACITY

Relationships and networks

Strategic planning

Use of technology

Policy development

SUGGESTIONS FOR BUILDING CAPACITY AND RAISING AWARENESS

CONCLUSIONS

APPENDIX A – QUESTIONS FOR ORGANIZATION LEADERS

APPENDIX B – QUESTIONS FOR KEY SECTOR LEADERS

REFERENCES

The Capacity Challenges of Nonprofit & Voluntary Organizations in Rural Ontario ii Executive Summary Nonprofit and voluntary organizations are an important element of rural communities, often addressing the needs and interests of citizens that the public and private sectors do not. The capacity of these organizations to achieve their missions thus has a direct bearing on the quality of life of rural residents. To improve understanding of the capacity challenges of rural nonprofit and voluntary organizations, the Foundation for Rural Living engaged Imagine Canada to conduct in-depth interviews with fifteen key informants. Ten of the interviewees were leaders of rural nonprofit organizations and five were leaders of key sector organizations in urban centres that serve or work with rural nonprofit organizations. This report presents the results of these interviews, which were conducted between February and April 2005.

The results of the interviews suggest that nonprofit and voluntary organizations in rural Ontario face a variety of challenges as they seek to fulfill their missions and achieve their objectives.

Many of these challenges are similar to those faced by urban organizations, for example:

organizations are too dependent on short-term project funding, leading to instability and an inability to plan; their funding has not kept pace with inflation or the demand for their services, leading them to cut services and/or spend a great deal of time pursuing alternative sources of funding; they have difficulty accessing corporate funding; grant applications are overly complex and time consuming to complete; they have difficulty recruiting and retaining staff because they are unable pay competitive salaries; and they have trouble recruiting and retaining volunteers.

Other problems facing rural nonprofit and voluntary organizations are unique. The most significant unique challenges appear to be: a small and shrinking pool of potential board members, staff members, volunteers, and donors due to migration from rural to urban areas; the high cost of serving clients who are spread out over great distances; and lower economies of scale. These challenges mean that rural organizations have both higher operating costs than urban organizations and fewer human and financial resources to draw on.

Rural nonprofit and voluntary organizations may also have more difficulty than urban organizations meeting many of their shared challenges. Interviewees offered several reasons for this, including: rural organizations have less access to certain types of funding (e.g., corporate sponsorships, individual donations); the networks that they can build are smaller and more costly to maintain due to greater distances between organizations; they have less access to technology and other resources; and they can devote fewer dollars to education and training because of the cost of having volunteers and employees travel to and from training locations.





As part of the interview process, interviewees were asked what could be done to build the capacity of rural nonprofit organizations and raise awareness about issues facing rural communities. They had four main recommendations.

1. Training. Rural organizations need better access to reasonably priced training and education; ideally, this training should take place in rural communities.

2. Communication. Rural organizations need to bring their issues to the attention of the public, the media, corporations, and government.

The Capacity Challenges of Nonprofit & Voluntary Organizations in Rural Ontario iii

3. Technology. Technology is crucial to rural organizations because it allows them to communicate more easily and cost effectively with their staff, volunteers, and other organizations.

4. Collaboration. Rural organizations need to work together to share resources, raise money, develop solutions, promote rural issues, and raise awareness.

This research represents Phase II of the Rural Charitable Sector Research Initiative (RCSRI).

Launched in 2003, the RCSRI is a multi-phase project aimed at developing a portrait of the nonprofit and voluntary sector in rural Ontario. Phase I of the RCSRI included an analysis of registered charities and individual giving and volunteering in rural Ontario. The results of Phase I and II combined provide a clear picture of the status of rural Ontario’s nonprofit and voluntary sector, its strengths, and its challenges. The next step is to bring representatives of rural organizations together – with each other and with representatives of government and business – so that we can begin to work together towards solutions.

The Capacity Challenges of Nonprofit & Voluntary Organizations in Rural Ontario iv

Introduction

Nonprofit and voluntary organizations in rural Ontario face a number of challenges as they work to fulfill their missions and achieve their objectives. Many of these challenges are similar to those faced by urban organizations, but others are unique. Some of the unique challenges of rural nonprofit organizations include: a small and shrinking pool of potential board members, staff members, volunteers, and donors due to migration from rural to urban areas; the high cost of serving clients who are spread out over great distances; and lower economies of scale.

The findings presented in this report are the result of in-depth interviews with fifteen key informants – ten leaders of rural nonprofit organizations and five leaders of key sector organizations in urban centres that serve or work with rural nonprofit organizations. The purpose of the interviews was to gain insights into the capacity challenges of rural nonprofit and voluntary organizations.

In conducting these interviews, we were guided by the conceptual model of organizational capacity presented in The Capacity to Serve: A Qualitative Study of the Challenges Facing Canada’s Nonprofit and Voluntary Organizations (Hall, Andrukow, Barr, Brock, de Wit, Embuldeniya, et al., 2003). This model distinguishes among three types of organizational capacity.

1. Financial capacity: the ability to develop and deploy the revenues and assets of the organization;

2. Human resources capacity: the ability to deploy paid staff and volunteers within the organization, and the competencies, knowledge, attitudes, motivations, and behaviours of staff and volunteers; and

3. Structural capacity: the ability to develop and use relationships and networks with various stakeholders; infrastructure and processes such as equipment, facilities, and management systems; and programs and strategic plans (Hall et al., 2003: 5).

The findings from 15 interviews cannot, of course, be generalized to all nonprofit organizations in rural Ontario. We hope, however, that the information presented in this report will help those with an interest in rural organizations (e.g., board members, staff members, volunteers, donors, foundations, corporations, and governments) to develop a better understanding of the challenges they are facing. This information can be used both to draw attention to the challenges of rural organizations and to develop evidence-based policies to help strengthen them.

This research constitutes Phase II of the Rural Charitable Sector Research Initiative (RCSRI).

Launched in 2003, the RCSRI is a multi-phase project aimed at creating a portrait of the nonprofit and voluntary sector in rural Ontario. The first phase of the project included a review of existing literature on the rural nonprofit and voluntary sector; an analysis of individual giving and volunteering in rural Ontario based on the results of the 2000 National Survey of Giving, Volunteering and Participating (NSGVP); and an analysis of registered charities in rural Ontario based on 1999 Canada Revenue Agency (CRA) data. The results of Phase I were published in A The Capacity Challenges of Nonprofit and Voluntary Organizations in Rural Ontario 1 Portrait of the Nonprofit and Voluntary Sector in Rural Ontario (Barr, McKeown, Davidman, McIver, & Lasby, 2004).

This report begins with a brief profile of rural Ontario and its nonprofit and voluntary sector and a summary of the capacity challenges faced by nonprofit and voluntary organizations across Canada. This information is intended to provide readers with a context for understanding the results of the interviews. In the following section, we explain the details of the research process.

Finally, we report on what we learned about the capacity challenges of rural nonprofit organizations and how organizations are meeting, or could try to meet, these challenges.

Rural Ontario and its nonprofit and voluntary sector Barr et al. (2004) report that, according to census data, 1.48 million people lived in rural and small-town Ontario in 2001. This represents a decline of almost 7% from 1991. National data indicate that rural communities have a slightly higher proportion of people over the age of 65 and under the age of 15 than urban communities. Canadians living in rural areas tend to have lower incomes, higher rates of unemployment, lower levels of education, and lower life expectancy than those living in urban centres. There is some evidence that the gap between urban and rural areas may be smaller in Ontario than in other regions of the country, but complete data are not available.

The results of the 2000 NSGVP show that rural Ontarians are more likely to donate to nonprofit and voluntary organizations (85% donated) than urban Ontarians (76% donated). Rural residents, however, donate less on average ($280 per year, compared to $322 per year for urban residents).

Rural donors are more likely than urban donors to give in response to a door-to-door solicitation and in memoriam. This behaviour suggests that rural donors are less strategic in their giving, but it also suggests that rural nonprofit organizations benefit from the fact that people living in rural areas are more likely to know and trust one another.

Rural Ontarians are more likely to volunteer for nonprofit and voluntary organizations than are urban Ontarians (31% or rural residents volunteered, compared to 24% of urban residents). Rural volunteers, however, contribute fewer hours on average (157 per year, compared to 168 for urban volunteers). Volunteer hours are more evenly distributed among volunteers in rural areas than in urban areas, which suggests that rural nonprofit organizations are not any more reliant on a small core of volunteers. Compared to urban Ontarians, rural Ontarians are more likely to say that health problems prevent them from volunteering more.

An analysis of 1999 CRA data reveals that charities in rural areas account for approximately 20% of all charities in Ontario, but only 4% of all charity revenue. Charities in rural areas are also smaller, on average, than urban charities. Almost all rural charities (97%) reported revenues under $1 million in 1999, compared to just 24% of urban charities. Not surprisingly, rural charities also report fewer paid staff than urban charities (22 vs. 44, on average). Compared to charities in urban centres, charities in rural areas receive proportionately more revenue from receipted gifts and less from government sources.

The Capacity Challenges of Nonprofit and Voluntary Organizations in Rural Ontario 2 Both the smaller size of rural charities and their lower level of government funding are at least partially explained by differences in program emphasis. Approximately 60% of charities in rural areas are classified as “religious” by the CRA compared to just 40% of charities in urban centres.

In comparison, only 22% of charities in rural areas are classified as “health, education, and social services,” compared to 39% of urban charities. Religious organizations tend to be smaller than health, education, and social services organizations, in terms of both revenues and paid staff (Hall et al., 2004). If religious charities are excluded from the analysis, rural charities receive proportionately more revenue from governments than urban charities.



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